NEW TECHNOLOGY IN THE SOVIET CHEMICAL INDUSTRY DURING THE SEVEN YEAR PLAN (1959-65)

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• Collection: General CIA Records
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• Document Page Count: 21
• Document Creation Date: December 23, 2016
• Document Release Date: July 23, 2013
• Sequence Number: 2
• Publication Date: November 1, 1962
• Content Type: REPORT

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CONFIDENTIAL N? 3
Economic Intelligence Report
NEW TECHNOLOGY
IN THE SOVIET CHEMICAL INDUSTRY
DURING THE SEVEN YEAR PLAN (1959-65)
CIA/RR ER 62-37
November 1962
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
CONFIDENTIAL
GROUP 1
Excluded from automatic
downgrading and
declassification
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CONFIDENTIAL
Economic Intelligence Report
NEW TECHNOLOGY
IN THE SOVIET CHEMICAL INDUSTRY
DURING THE SEVEN YEAR PLAN (1959-65)
CIA/RR ER 62-37
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
CONFIDENTIAL
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FOREWORD
As part of the Seven Year Plan (1959-65) for development of its
chemical industry, the USSR has planned widespread introduction of
automation and mechanization, along with a number of other measures
intended to increase efficiency. Conditions inherent in production
of most present-day Chemicals favor the application of advanced auto-
mation and mechanization. The production cycle is often expedited by
the use of continuous processes, and stringent demands exist for the
control of processes because of the requirements for high purity of
products and the danger of fire, explosion, or poisoning of the atmos-
phere. In addition, the necessity for handling large amounts of bulky
materials, both raw and finished products, places a premium on the de-
velopment of laborsaving devices for loading and unloading and for
weighing and packaging of materials.
The purpose of this report is to discuss the details of the various
programs for technical advance in the Soviet chemical industry during
the Seven Year Plan, indicating wherever possible the anticipated savings
in capital or labor, the degree of progress in implementing these pro-
grams during 1959-61, and the expected improvements by the end of the
Seven Year Plan.
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CONTENTS
Page
Summary and Conclusions 1
' I. Introduction 3
II. Plans, Progress, and Problems Relating to the Introduction
of New Technology 3
A. Automation 3
B. Mechanization 6
C. Process Technology 6
D. Research and Planning Facilities 9
III. Probable Effects of the Program for Technical Change in
the Chemical Industry 10
A. Effects on Cost
11
1. Changes in the Raw Materials Base and Introduction
of New Processes 11
2. Cost Savings by Automation and Mechanization ? ? 12
3. Increased Scale of Output 13
B. Effects on Labor and Capital Productivity 13
C. Effects on Production .......... ? ? ? ? 15
1. Improvements in Quality
2. Fulfillment of Production Goals
15
15
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NEW TECHNOLOGY IN THE SOVIET CHEMICAL INDUSTRY
DURING THE SEVEN YEAR PLAN (1959-65)*
Summary and Conclusions
The USSR is engaged in an ambitious program to triple gross produc-
tion of chemicals during the Seven Year Plan (1959-65). To minimize the
capital and labor requirements for this expansion program, and also to
improve the quality of output of the industry, the USSR has adopted a
number of measures calculated to increase the efficiency of its chemical
processing. These measures include conversion to a new raw materials
base (petroleum and natural gas), adoption of more modern production
processes (partly by purchase of technology from the Free World), im-
provement in the design of chemical facilities, and widespread introduc-
tion of automation and mechanization.
Of the total planned investment of 10.0 billion to 10.5 billion
rubles** in the Soviet chemical industry in 1959-65, investment in
automation is scheduled to be from 0.2 billion to 0.4 billion rubles.
In 1959-61, progress toward the goal appears to have been only modest.
Some success, however, was reported in the automation of plants pro-
ducing synthetic alcohol, nitric and sulfuric acids, ammonia, synthetic
rubber, alkali products, and styrene. The use of computer control is
still quite limited, and more widespread application of computers is
being hampered both because Soviet automation specialists lack suffi-
ciently detailed knowledge of chemical processes and because measuring
devices now available to the chemical industry are often of inadequate
quality and reliability to provide good process control using standnrd
procedures, much less advanced computer-control techniques. Consider-
able Soviet interest has been evinced in the future use of computers
for designing model-scale plants in order to facilitate the transition
from laboratory to production on a commercial scale, a transition that
is at present a major bottleneck.
* The estimates and conclusions in this report represent the best
judgment of this Office as of 1 November 1962.
** Ruble values in this report are given in new rubles established by
the Soviet currency reform of 1 January 1961. A nominal rate of ex-
change based on the gold content of the respective currencies is 0.90
ruble to US $1. This rate, however, should not be interpreted as a
precise ruble-dollar relationship that will yield an equivalent dollar
value for the ruble.
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In addition to the emphasis on automation, the USSR is devoting con-
siderable effort to the mechanization of chemical plants, although re-
stats are as yet modest in comparison with the need. Thus manual labor
accounts for about 40 percent of the total labor requirements in produc-
tion of Soviet Chemicals.
As with automation and mechanization, Soviet adoption of improved
chemical processes also was quite limited in 1959-61, although it is
claimed that better processes have been developed for production of
certain types of synthetic rubber, fibers, and plastics. Lags in de-
velopment of a number of chemical products have been admitted, includ-
ing development of durable tire cord, improved fertilizers and pesti-
cides, and certain of the newer types of synthetic rubber.
Difficulties encountered in accelerating development of the chemical
industry have spurred efforts by the USSR to purchase technical data and
advanced equipment from the West. In 1958-61 the USSR contracted for
the purchase of more than 50 complete chemical plants from the West, and
further purchases are likely in view of the continuing difficulties in
domestic development and production of chemical equipment.
In further support of the program for rapid technological develop-
ment, the State Committee for Chemistry has undertaken a rapid buildup
of its research and planning institutes. The number of workers in
planning institutes of the State Committee reached 19,000 by the end
of 1960, more than double that in 1957. In spite of this increase,
however, the operation and organization of these institutes is far
from ideal, and shortages of technically qualified personnel persist.
The failure of the Soviet chemical industry to meet investment goals
in the first 3 years of the Seven Year Plan has been caused in part by
the continuing difficulties associated with the development and mastery
of new processes and equipment. Technical changes for the next few years
probably will continue to be introduced more slowly and often at greater
cost than anticipated by Soviet planners. As a result, the goals for 1965
for priority chemical products such as fertilizers and plastics are un-
likely to be met, and increases in productivity probably will be less than
planned. Even the limited adoption of modern processes and Cheaper raw
materials, however, should permit considerable savings in the production
costs of the Soviet chemical industry, and improvements in the quality of
products such as motor vehicle tires will provide additional savings to
the Soviet economy. These technical changes, moreover, should facilitate
the continued rapid expansion of the Soviet chemical industry scheduled
through 1980.
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I. Introduction
The USSR is in the midst of an ambitious program to triple gross pro-
duction of chemicals in 1959-65, with heavy stress on both the construc-
tion of new facilities and the expansion and modernization of existing
ones. At present the Soviet chemical industry, although the second
largest in the world, does not adequately meet the requirements of the
Soviet economy, and operation of the industry is inefficient by Western
standards, being characterized by batch processes and large inputs of
manual labor. For example, labor productivity in the Soviet cellulose
industry reportedly is 42 percent of that in the equivalent US branch
of industry, while productivity in the sectors of the chemical industry
producing synthetic rubber and artificial fibers is said to be 18 and 19
percent, respectively, of that in the US. 1/* To alleviate such short-
comings, the USSR is stressing the adoption of technological measures
with a heavy orientation toward economy in the use of labor. The intro-
duction of new technology is scheduled to provide a greater share (71
percent) of the planned increase in labor productivity in the chemical
industry than in Soviet industry at large (50 percent). 2/ Mechaniza-
tion** is to be increased in the mining of chemical raw materials and
in plant operations involving the handling of large amounts of raw and
finished materials. Fully automatic continuous processes are scheduled
to replace batch processes in order to assure higher yields and greater
uniformity of end products and to minimize inputs of raw materials and
labor. In addition, the industry is scheduled to effect a radical shift
to the use of petrochemicals*** and to improve the design of new Chemical
facilities in order to achieve savings in capital and to utilize byprod-
ucts more efficiently.
II. Plans, Progress, and Problems Relating to the Introduction of New
Technology
A. Automationt
In contrast to the US, where automation is applied extensively
in the chemical industry, the present status of automation in the Soviet
** For the purposes of this report, mechanization may be defined as the
substitution of machines for direct labor by human personnel.
*XX The term petrochemical is used in this report to refer to primary or
basic Chemicals obtained from petroleum or natural gas. Examples include
acetylene, ethylene, and propylene.
t As used in Soviet literature, the term automation is sometimes am-
biguous but generally refers to the use of automatic processing units or
some form of automatic production system. The Soviet authorities dis-
tinguish three levels or degrees of automation: partial, complex, and
full. See also the second footnote on p. 4, below.
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chemical industry is characterized by a great deal of partial automation
that is neither coordinated nor so productive as it could be. To a large
extent this lag has resulted from the inadequate variety and quality of
the instruments being produced and from the frequently inferior process
design work. In addition, much of the present equipment is not adaptable
to automatic control. In the new plans for automation, priority has been
assigned to developmental work mainly on those chemical processes that
are most labor-intensive.
Investment data provide some indication of the significance of
the plans for automation during 1959-65. Of the 10.0 billion to 10.5
billion rubles that are to be invested in the industry, expenditures for
automation are to be from 0.2 billion to 0.4 billion rubles,* reportedly
comprising 9 percent of the total investment in equipment for the chemi-
cal industry. 2/ In contrast, expenditures for automation of chemical
plants in recent years generally have not exceeded 1 to 3 percent of the
total cost of equipment. g
50X1
More than 150 shops and production 50X1
processes reportedly will be automated.xx Priority is being given to
automating production of petrochemicals, synthetic materials (rubber,
fibers, and plastics), fertilizers, alkali products, dyes, and alcohol.
Plans for 1965 call for production of synthetic rubber and synthetic
alcohol to be fully automated, production of plastics to be 95 percent
automated, and production of synthetic fibers to be 90 percent automated.
Model automated plants are to be established at Voronezh, Lisichansk,
Novomoskovsk (formerly Stalinogorsk), and Barnaul.
Soviet writers have not published comprehensive data on the ex-
pected effect of implementation of the automation program. Some partial
data are available, however, that appear to apply to the effect of auto-
mation on those segments of the chemical industry which are to be auto-
mated. Thus it is stated that automation will increase output by 5 to 8
percent, increase the productivity of labor by at least 30 percentl***
* The USSR has published two figures that relate to planned invest-
ment in automation, one giving a range of 0.2 billion to 0.25 billion
rubles, 2/ the other stating that more than 0.4 billion rubles will be
invested in instrumentation and means of automation.21/ The higher
figure may be the more valid one in view of the ambitious plans.
** The degree of automation intended is not known, although a Soviet
report suggests that automation in the chemical industry may occur in
three stages, proceeding from automation of individual processes or
units of equipment through automation of the complete production proc-
ess to centralized control of the entire enterprise. 2/
*XX A Soviet article states that automation of plants producing syn-
thetic rubber, alcohol, and artificial fibers will increase the produc-
tivity of labor 40 percent in these areas by 1965. g
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lower the cost of production by 10 to 15 percent, and decrease the num-
ber of service personnel by 15 to 20 percent. 21/ The laborsaving effect
is noteworthy and consistent with the priority given to automating labor-
intensive processes.
Soviet achievements thus far in automating the chemical industry
appear in sharp contrast to the plans. progress 50X1
seems to have been limited to partial automation of some of the plants
producing synthetic alcohol, nitric and sulfuric acids, soda ash, caustic
soda, and styrene, and one fully automated nitric acid plant was reported
to be operating in November 1961 at Dneprodzerzhinsk. 12/
As one might expect from the slow introduction of automation, com-
puters are not widely used in the Soviet Chemical industry. In September
1961 the chief engineer of the Experimental Design Bureau of Automatics
of the State Committee for Chemistry reported that "we need machines --
the talk that computers are ready does not correspond to reality," add-
ing, "therefore, we cannot discuss a broad application of computing ma-
chines to the chemical industry." 21/ On a limited scale, however, the
use of computers of the Mars type* has been initiated at synthetic rub-
ber plants at Voronezh and Yefremov and at rubber fabricating plants in
Moscow. An elaborate computer is being developed by the Moscow Power
Institute for the Voronezh rubber plant, one of the scheduled model auto-
mated plants of the Chemical industry. The new computer allegedly will
control the technological process for production of synthetic rubber,
including the auxiliary services, as a single interrelated complex. 12/
A computer is in use at the fertilizer plant at Novomoskovsk, another
enterprise planned to be a model of automation. In a recent experiment
in remote control a computer at the Ukrainian Academy of Sciences regu-
lated the operation of a unit at the Slavyansk Soda Combine, 630 kilo-
meters distant. The experiment may be related to a Soviet plan to create
single computation centers for several industrial enterprises of a given
region, on the theory that the existing individual installations cannot
utilize the full potential of the new computers.
Among the impediments to the broader use of computers in the
Soviet chemical industry (and in the West as well) is the insufficiently
detailed knowledge of many chemical processes, which limits the possibil-
ities for developing mathematical expressions of these processes, a pre-
requisite to the efficient use of computer control. In addition, present
measuring devices available in the USSR reportedly do not supply suffi-
cient information to assure the most effective control of the composition
* A class of Soviet computers with various designations, depending on
the number of points to be monitored. The Mars-300, for example, con-
ducts automatic registration and signalization of 300 points of a tech-
nological process.
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and quality of products. 12/ Although these weaknesses suggest that com-
puter control will continue to be introduced slowly in plants of commer-
cial scale in the USSR, considerable Soviet interest has been expressed
in the use of computers to speed the transition from laboratory to com-
mercial production by aiding the design of model-scale plants and equip-
ment. It is precisely these areas that have contributed to much of the
lag in development of new chemical products in the USSR, so that the in-
creased use of computers for such purposes can be quite significant in
the future development of the Chemical industry.
B. Mechanization
The level of mechanization in the Soviet chemical industry is
extremely low, and considerable savings of money and manpower are pos-
sible if operations such as loading and unloading, Charging of raw ma-
terials into reactors, and weighing and packaging of materials are mech-
anized. A Soviet article comparing the periods of time required to re-
coup investment in mechanization in several major industries showed that
such investment was recouped most rapidly in the chemical industry.1211
At present, manual labor reportedly accounts for about 4o percent of the
total labor requirements in production of Soviet Chemicals, with more
than 15 percent of all Soviet chemical workers engaged in materials han-
dling operations. 12/ The USSR is devoting special emphasis during the
Seven Year Plan to mechanizing the mining of chemical raw materials such
as sulfur and apatite, as well as mechanizing production of basic chemi-
cals and fabricated rubber and plastics products. Reportedly, 100,000
workers in the Chemical industry will be available for other tasks if
the level of mechanization planned for 1959-65 is attained. 1.6/
Some progress has been reported in mechanizing Soviet plants
during 1959-61, including those producing molded industrial goods and
tires, alcohol, and butadiene, but difficulties in this area persist.
In a new tire plant in Baku, for example, 80 percent of the conveyors
intended for intraplant movement of raw materials were not yet operating
as of January 1962, although the plant had started up in 1959.
C. Process Technology
Many of the new Chemical processes planned for introduction by
the USSR in 1959-65 envisage the use of petrochemicals, although these
materials found only limited application in the Soviet chemical industry
until recently. The Seven Year Plan calls for the chemical industry to
use about 2.5 million tons* of liquid hydrocarbons derived from gas in
1965. In the USSR in 1965, 55 percent of the total production of ammonia
is scheduled to be made from petrochemicals, as is 95 percent of production
* Tonnages are given in metric tons throughout this report.
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of synthetic rubber, 66 percent of that of phenol, 93 percent of that of
caprolactam, and the entire production* of polyethylene and polyvinyl
chloride. 12/ According to a Soviet source, the creation of large petro-
chemical facilities would permit a reduction of at least 15 to 20 percent
in the cost of producing many Chemicals. 1.& As an additional source of
basic materials, the chemical industry plans to exploit more of the val-
uable components of its raw and waste materials than hitherto, and this
trend will promote the development of large multiproduct complexes. For
example, further exploitation of the natural gas at nitrogen fertilizer
plants will lead to combining production of ammonia with products such
as acetylene and alcohol.
In addition, the Soviet chemical industry is advocating the adop-
tion of other improved chemical processes, particularly the substitution
of continuous processes for batch processes and the construction of plants
with larger unit capacities.** To illustrate the latter point, polyethyl-
ene plants built during the Seven Year Plan are now scheduled to have unit
capacities of 24,000 tons or more, although plants with capacities of
5,000 to 20,000 tons were scheduled during the preliminary work on the
plan.
During the first 3 years of the Seven Year Plan the USSR made
some progress in the development and introduction of new chemical proc-
ess technology. In the petrochemical field the use of natural or re-
finery gas was initiated in production of ammonia at Novomoskovsk,
Chirchik, and Salavat; in production of synthetic rubber at Sumgait,
Stavropol', and Sterlitamak; and in production of ethyl alcohol at a
number of installations. In addition, the USSR has claimed completion
or near completion of development work in the following areas: continu-
ous processes for production of synthetic rubber, caprolactam, xxx cellu-
lose triacetate, polyvinyl chloride, bakelite resins, and polyvinyl al-
cohol; an improved process for production of acetaldehyde eliminating
the use of mercury; and a fluidized bed process for production of sulfuric
acid. Also, moderately extensive developmental work appears to be under-
way on the use of radiation in processes such as polymerization and vul-
canization of polymeric materials.
* Petrochemical raw materials would not necessarily be the sole in-
gredient in these chemical products but would be used to provide at least
one component of the finished product.
** The USSR may be considering a modification of its goal for develop-
ing plants of large capacity in the case of some fertilizer facilities.
ammonia plants of medium
year) mak be built near areas of
capacity (50,000 to 100,000 tons per
consumption.
*XX An intermediate used in production of Nylon-6.
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In spite of the reported achievements, it is apparent that the
rate of the development of new Chemical processes demanded by the Seven
Year Plan has not been approached. A conspicuous lag in the introduc-
tion of petrochemicals has been in production of acetylene. An instal-
lation using natural gas to produce acetylene allegedly went into opera-
tion at Saratov in 1959, but a report of November 1961 revealed that no
useful output had yet been obtained. 12/ Similarly, delays have been
encountered in working out processes for production of more durable tire
cord, polyisoprene rubber,* pesticides and herbicides, synthetic glyc-
erine, and a number of other products. There is reason to suspect,
moreover, that the existing pace is already too fast for rational de-
velopment in some areas and that the USSR has introduced processes which
still embody serious defects. For example, a continuous process for pro-
duction of nitrile rubber introduced at Sumgait yielded such poor results
that the unit was subsequently dismantled. 22/ At a new ammonia shop at
Lisichansk the percent of conversion of ammonia into useful production
reportedly was far below that of an old shop which had been operating for
10 years. 21/
Part of the delay in introducing new process technology in the
Soviet chemical industry can be attributed to weaknesses or difficulties
in the manufacture of chemical equipment. Production of chemical equip-
ment in general has been inadequate to meet the demand, and the shortage
has been most severe in the newer types of equipment. UnderfUlfillment
of plans for the creation of capacity for production of new equipment
has been the principal cause of the shortage. More than one-third of
the new capacity for production of Chemical equipment planned for in-
troduction in 1960 failed to go into operation. 22/ Other factors also
have contributed to the shortage. Production of chemical equipment has
been hampered by haphazard planning that has been reflected in shortages
and late deliveries of input materials, such as special steels and alloys,
clad metal, ceramics, and tantalum. 23/ The shortage of equipment, and
particularly the Shortage of newer types of equipment, has been aggra-
vated further by the tendency of Soviet producers to concentrate on pro-
duction of more easily manufactured items at the expense of more critical
items. The existing design facilities, moreover, have not been able to
keep pace with the large demand for new and more modern equipment, partly
because poor planning by the Chemical industry itself has resulted in
changes of plans, causing frequent cancellation of orders and redesign of
equipment. 2)1/
Because of the difficulties experienced in expanding and modern-
izing its chemical industry, the USSR has resorted to large-scale purchase
of chemical technology and equipment in the Free World. In 1958-61 the
* A relatively new type of synthetic rubber with a potential for use as
a complete substitute for natural rubber.
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USSR contracted to purchase more than 50 chemical plants from non-Bloc
countries, with many of the installations embodying advanced concepts
of automation and mechanization and some permitting production by petro-
chemical processes. In some sectors of the chemical industry, partic-
ularly those producing viscose cellulose, fibers, polyethylene plastic,
and motor vehicle tires, the purchases constitute a rather sizable part
of the planned increases in production. In other fields, such as syn-
thetic rubber and fertilizers, purchases do not appear to have been suf-
ficiently extensive to overcome the domestic lags in development. In
the case of certain products such as synthetic rubber, Western trade
controls appear to have blocked or retarded Soviet acquisition of ad-
vanced processes.
In addition to the purchase of Western technology, the USSR is
obtaining chemical technology and equipment from the European Satellites,
in part through the mechanism of the Council for Mutual Economic Assist-
ance (CEMA). Joint efforts undertaken by the Soviet Bloc to speed the
development of automation in the chemical industry include but are not
limited to the following fields: production of butadiene-styrene rubber
(the USSR and East Germany), the electrolytic production of chlorine (the
USSR, East Germany, and Czechoslovakia), and the use of radioisotopes in
measuring and regulating instruments (the USSR and Hungary). 22/
D. Research and Planning Facilities
To evaluate more accurately the program for rapid technological
development of the Soviet chemical industry, it is important to under-
stand the present composition and functions of the State Committee for
Chemistry, which is attached to the Council of Ministers, USSR. The
State Committee appears to have major responsibility for the introduc-
tion of new technology in the chemical industry, with some technical
support from the Academy of Sciences and from a number of other organ-
izations outside the direct jurisdiction of the chemical industry. The
State Committee is composed of a number of functional main administrations
(such as the Main Administration of Tires and Rubber Technical Articles)
and technical and planning institutes. Each planning institute, while
directly subordinate to the State Committee for Chemistry, is guided pri-
marily by the corresponding Main Administration.* The Main Administration
coordinates the activity of the planning organizations with the work of
the research institutes, monitors the progress of construction of chemical
enterprises, regulates the release of technical documentation, and adopts
decisions to introduce new processes or equipment.
* For a discussion of the multisubordination of planning institutes with-
in the State Committee, see p. 10, below.
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A rapid buildup of the chemical research and planning institutes
within the State Committee has been underway since 1958. In 1959 and
1960, 8 new scientific research institutes and 34 branches of institutes
and design organizations were established in centers of the chemical in-
dustry. 2g The number of workers in planning institutes of the State
Committee rose from 8,000 in 1957 to 19,000 by the end of 1960. 21/ In
addition, about 10,000 people from subcontracting organizations of other
branches of the economy work on special parts of the plans for the chemi-
cal industry, making a total of almost 30,000 so engaged. 2.g/
In spite of the rapid buildup of the technical and planning in-
stitutes of the State Committee for Chemistry, frequent criticism is
voiced in the Soviet press because of their continued espousal of tech-
nically outdated processes, because of delays in the provision of docu-
mentation, and because of alleged defects in the very organization of
the institutes. A shortage of technically qualified workers is apparent
in spite of the rapid increase in personnel. Only 2 percent of the
workers in scientific research institutes of the State Committee re-
portedly are engaged in work on automation and almost half of the in-
stitutes have no specialists on automation. 12/ Some of the institutes
are organized along the narrow product lines of the former Ministry of
the Chemical Industry, and this arrangement has complicated support of
the multiproduct chemical complexes now under construction, particularly
because communication problems emerge when a dozen or more different
organizations in widely separated geographical locations must be con-
tacted in reference to a single construction project. Some scientific
research institutes, moreover, are still performing parallel functions
in the planning of gas separation processes, processes operating under
high pressure, and processes for production of important products such
as polyethylene plastic. Eli This dispersal of authority often results
in different technical decisions being made on the same process, ulti-
mately delaying the adoption of new processes. An organizational weak-
ness of the planning organizations stressed in a recent Soviet article
is that of multisubordination, which creates a certain amount of over-
lapping control. For example, the planning organizations of the
State Committee are responsible not only to the product-oriented main
administrations noted above but also to the Administration of Planning
and Capital Construction, to the Financial and Accounting Department,
and to the Planning and Economic Administration.* In addition, some of
the major institutes also are subordinate to the Technical Administration
of the State Committee.
III. Probable Effects of the Program for Technical Change in the Chemical
Industry
Although the negative features of forced growth have been very pro-
nounced in the chemical industry in the first half of the Seven Year Plan,
* These three organizations are all in the State Committee for Chemistry.
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the emphasis on automation and mechanization and on the introduction of
new products and processes, the magnitude of the planned shift in the
raw materials base of the industry, and the rapid buildup of scientific
and technical support strongly suggest that some improvement in effi-
ciency will be achieved by 1965 and that progress toward the attainment
of a modern and diversified chemical industry will be more rapid than
that experienced hitherto. The tentative nature of the over-all plans
for introducing new technology and the generally dynamic nature of the
chemical industry preclude a very precise estimate of what will be
achieved, but it is possible to predict the likely trend in reduction
of operating and capital costs and in improvement of quality* by 1965
and to relate the program for technical advance to the possibilities
of plan fulfillment for some of the high-priority products.
A. Effects on Cost
Actual savings in the cost of producing Soviet chemicals in
1965 probably will be considerably less than anticipated in the origi-
nal plans, because such technical changes as are introduced will fre-
quently be tardy and more expensive than was foreseen. In 1959 and
1960 the reduction in production costs of chemicals in the USSR per
ruble of commodity output was about 1 percent annually,** whereas the
comparable reduction for all industrial goods was about 1.7 percent. 12/
The factors most likely to result in savings in cost in the Soviet chemi-
cal industry by 1965 are discussed below.
1. Changes in the Raw Materials Base and Introduction of New
Processes
The substitution of petroleum and natural gas for conven-
tional raw materials such as coke and edible agricultural products
should provide substantial savings in cost in certain branches of the
Soviet chemical industry by 1965, although the program is unlikely to
be implemented in full. the use of petro-
chemical raw materials in the chemical industry was to permit a saving
in investment costs of 650 million rubles in 1959-65,*** about 80 per-
cent of which apparently would result from reduced costs for construc-
tion of plants producing synthetic rubber and nitrogen fertilizers. t 1/Y
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* Actually there is some overlapping in the consideration of reduction
in cost and in improvement of quality, for the latter in effect often re-
sults in a reduction in cost, but for ease of presentation the two sub-
jects will be discussed separately.
** In comparable prices.
*** A concomitant annual saving of 130 million rubles in operational
outlays also is planned.
t The investment per ton for creating new ammonia capacities in 1959-65
is planned to be only 60 percent of the equivalent level in 1951-55. 1V
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A reduction in unit investment costs apparently is being realized in the
case of the nitrogen fertilizer plants, but unit investment costs for
synthetic rubber plants, contrary to plan, have actually been rising. 12/
Part of the anticipated savings obtained from the use of petroleum and
natural gas is to result from lower manpower requirements compared with
the use of alternative raw materials. For example, production of ethyl
alcohol and fatty acids from petrochemicals instead of edible agricul-
tural products reportedly will permit a saving of more than 450 million
man-hours in 1965. 3g
Apart from petrochemicals, other new or improved chemical
raw materials should yield significant savings to the USSR by 1965. For
example, the use of chemical fibers (such as cellulose and nylon) instead
of cotton* in production of tire cord, together with improved types of
carbon black and synthetic rubber, allegedly will permit a radical im-
provement in the life of Soviet motor vehicle tires by 1965, with a re-
sultant saving of 600 million to 700 million rubles in investment costs
and 800 million rubles in operational outlays during the Seven Year
Plan. 2Lii Again, the actual savings probably will prove more modest be-
cause of the slow progress in improving the life of tires in the first
3 years of the plan.
In addition to the improved raw materials, the introduction
of more modern processes or equipment unquestionably should provide some
reduction in the cost of producing Soviet chemical products, particularly
products such as fibers, plastics, carbide, and acetylene.** As noted,
some of the better processes will be obtained through purchases of Western
technology rather than as a result of native Soviet development.
2. Cost Savings by Automation and Mechanization
Automation and mechanization may be expected to provide some
reductions in the cost of producing Soviet Chemicals, particularly by in-
creasing labor productivity and by permitting the more efficient use of
raw materials, but the short-term savings by automation probably will be
offset to a considerable degree by the increased cost for instrumentation.
On the.other hand, mechanization of labor-intensive operations in the min-
ing of apatite and sulfur, in the loading and unloading of bulky products
such as soda ash, and in the fabrication of industrial rubber articles and
* Cotton cord accounted for about 50 percent of all tire cord in 1958
but is scheduled to account for only 9 percent of such cord in 1965. Re-
portedly the increased use of viscose and nylon cord will save more than
90 million man-hours in 1965. Ei
** For indications that progress in mastering game of the new processes
may be slower than anticipated, thus tending to modify expected reductions
in cost, see p. 8, above.
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motor vehicle tires Should provide substantial short-run savings in the
chemical industry. The highly mechanized Dnepropetrovsk Tire Plant,
supplied by a Western firm, reportedly will permit an hourly output of
about 54 pounds of finished product per worker compared with 48 pounds
per worker obtained in leading US tire plants. 22/ The increase in pro-
ductivity above that in the older Soviet plants is apparent from a re-
port showing that the average hourly output per worker in the Soviet
tire industry was only 33 pounds as of 1959. 1.42/
3. Increased Scale of Output
The trend to larger or more productive individual production
units to gain economies of scale by spreading overhead and capital costs
over a greater volume of output should be quite evident in the Soviet
chemical industry by 1965, particularly in production of synthetic rub-
ber and plastics, alkalis, fertilizers, chemical fibers, tires, petro-
chemicals, and certain industrial gases such as oxygen. The increase
in the scale of output reportedly is to be responsible for 13 percent
of the planned increase in the productivity of labor in the chemical
fiber industry.* ).11/
An increase in the scale of output at a fairly modest cost
can be achieved in production of synthetic rubber at the newer Soviet
plants by using an oil-extension process.** Reportedly the new syn-
thetic rubber plant at Sterlitamak produces an improved oil-extended
rubber. Although some oil-extended rubber also is produced at one or
more of the older Soviet plants, it is doubtful that sizable economies
can be obtained in the immediate future by a further changeover to oil
extension at the older plants, because many of them still produce the
inferior sodium-butadiene rubber that apparently is not so amenable to
oil-extension as butadiene-styrene copolymer rubbers. Oil-extension
probably will be used at more of the older plants by 1965, however,
after they start producing the newer types of rubber.
B. Effects on Labor and Capital Productivity
Althoudi the costs of production are expected to decline and al-
thou& total productivity is expected to rise, divergent trends probably
will occur in output per unit of individual factors of production. The
productivity of labor undoubtedly will increase. A labor productivity
* Productivity of labor in the Soviet chemical fiber industry is
scheduled to increase 60 to 70 percent during the Seven Year Plan.
** Certain oils can be added to copolymer (butadiene-styrene) rubber
to extend the amount of rubber produced. In addition, these oil-
extended rubbers have a lower heat buildup than conventional types and
thus have a favorable effect on the life of tires.
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target has not been announced for the chemical industry in the Seven Year
Plan, but in view of the ambitious nature of the plans for laborsaving
innovations it is probable that the increase in productivity is planned
to be at least equal to the 45 to 50 percent scheduled for all industry.*
The actual increase in labor productivity probably will be somewhat lower
than this, however, because of the lag in introducing new technology. In
1959 and 1960 the increase in labor productivity in the chemical industry
lagged behind that of all industry.
In contrast to the expected increase in labor productivity in the
chemical industry, a decline in capital productivity probably will take
place. The planned investment of 10.0 billion to 10.5 billion rubles in
the chemical industry in 1959-65 is expected to yield an increase of about
9.5 billion rubles in the gross value of chemical output.** In the pre-
vious 7-year period an equivalent investment of about 2 billion rubles in
the chemical industry yielded an increase of more than 3 billion rubles
in the value of gross output.*** Thus it would appear that more capital
is planned to be invested in the chemical industry during the present
Seven Year Plan per unit of added output than in the previous 7-year
period.t This development is in part a reflection of the shift to more
* The planned increase in labor productivity in the branch of the
chemical industry producing fibers is 60 to 70 percent and in the branch
producing tires, 55 percent.1E/ In spite of the probable large increase
in labor productivity planned for the chemical industry in 1959-65, how-
ever, the scheduled tripling of Chemical gross output should result in a
significant increase in total employment in this industry above that in
1958, when the labor force is believed to have amounted to about 700,000.
The increase in the labor force should be apparent even if the production
goal is not fully achieved.
** It is estimated that the plan for 1965 calls for the value of gross
output of the chemical industry to be 2.8 times that in 1958, and there-
fore it is estimated that the Seven Year Plan calls for the total value
of output of the Soviet chemical industry in 1965 to be about 14.8 bil-
lion rubles compared with 5.3 billion rubles in 1958. The figure for
1958 was computed from a Soviet report on the value of gross output in
Chemicals in 1955,211/ on the basis of the officially reported annual
increases for subsequent years.
*** That is, the increase in the value of output in 1958 compared with
that in 1951. The estimate was made on the basis of annual percentage
increases in gross production,121/ plus the Soviet report on the absolute
value of gross production in the chemical industry in 1955.1?5./
t According to a recent text on productivity trends in the US, /L/
long-term savings in capital per unit output were achieved in the chemi-
cal industry in spite of the substitution of capital for labor, but the
study showed that in certain periods of the industrial development out-
put per unit of capital declined. Thus the present trend in the Soviet
chemical industry may well show different characteristics over more ex-
tended periods of time.
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capital-intensive processes not offset by some of the capital-saving in-
novations previously described, such as the use of larger production units
and more compact plant layouts. In addition, the decline in capital pro-
ductivity probably is being caused by a higher rate of replacement of ob-
solete equipment than in the past and by the emphasis on construction of
a large number of new plants.
C. Effects on Production
1. Improvements in Quality
Some of the factors that will contribute to the reduction in
capital or production costs in the Soviet Chemical industry will simul-
taneously result in an improvement in the quality of Chemical products.
For example, many of the present inadequacies of Soviet chemicals are
caused by insufficient attention to the purity of raw materials or to
the uniformity of end products. The use of automation to monitor and
control the flow of materials during the Chemical process should facili-
tate the removal of excess impurities and result in an end product with
more consistent properties.
The use of alternative or improved raw materials eventually
will have a dramatic effect on the quality of Soviet Chemical products,
particularly in the synthetic materials sectors. An example already
noted will be the improvement in Soviet motor vehicle tires by the sub-
stitution of nylon and cellulose cord for cotton cord and the use of
improved types of synthetic rubber and carbon black.
A further factor in improving the quality of chemical prod-
ucts will be the Change in the product mix. This change will be particu-
larly evident in the Soviet fertilizer industry, where the production of
complex or concentrated fertilizers should eventually assure agriculture
of more effective products. Soviet plans call for a changeover to pro-
duction of more concentrated and efficient forms of superphosphate and
nitrogen fertilizer and to fertilizers containing a variety of nutrients
rather than the simple types predominantly produced today.
2. Fulfillment of Production Goals
The Soviet failure to meet chemical investment goals in the
first 3 years of the Seven Year Plan, which probably stems from the vari-
ous problem areas that have emerged with respect to equipment and the
mastery of new processes, appears to preclude fulfillment of the goals
for 1965 for mineral fertilizers and certain synthetic materials, notably
plastics. In addition, the disorganization in planning may well result
in disproportionate development of sectors producing basic chemical ma-
terials and those producing finished products.
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